Cloud APIs deliver the 'Holy Grail': Xero

Open APIs are a critical part of the cloud, according to accounting provider Xero's local MD. And a Melbourne street food operator shows how easily multiple cloud services can be assembled to meet the diverse needs of a small business.

He said Xero realised the importance of open APIs when the cloud accounting system only had about 25 add-ons. Providing open APIs means Xero doesn't have to build all the functionality its customers may want, whether that's for horizontal capabilities such as costing, inventory or collections, or vertical solutions (industry-specific software catering for markets such as hospitality, retail, or professional services).

Examples of the two categories include Receipt Bank for receipt submission and Kounta or Vend for point of sale.

Xero benefits from being able to "stick to its knitting," in other words to concentrate on core accounting functions.

Customers benefit from being able to choose add-ons or complementary products that provide exactly the features they need. The SME market is very fragmented, Ridd said, to the extent that Kounta can be a better fit for one cafe while another is better served by Vend: "One size doesn't fit all," he emphasised.

In some cases, this openness to integration has brought customers to Xero.

One example is Melbourne-based food truck and store business Mr Burger.

The company was founded two years ago by managing director Maleik Edwards who saw the food truck concept in the US - "people loved it" - and decided to try it in Melbourne. Mr Burger now has four trucks and three stores, with another five trucks hitting the streets before 2014 is over.

He discovered Kounta "by accident" and then found that it "works fantastically" for Mr Burger. The next step was to integrate it with an accounting system, and accountants Blue Rock recommended Xero.

The company is also using a cloud-based rostering system, Beat the Q's "really great" mobile ordering service, and PayPal's mobile payment system, all of which integrate with Xero.

The next step will be to add a loyalty/rewards system, and two have been shortlisted. "We're experimenting with some other stuff," Edwards added.

Xero is trying to inform bookkeepers and accountants about the range of choices open to their clients, but realises those specialists are unlikely to want to get involved in integration issues. So the company is building a 'cloud integrator' channel to support bookkeepers and accountants in this regard.

Xero has invested in its open APIs, which have been an important part of the company's strategy from the start, he said.

But some cloud accounting vendors are "misguided" and prefer acquisition to open APIs, but this reduces customer choice, according to Ridd.

"We're always evolving the APIs," he said, "we've been doing it for eight years."

The feedback from developers and partners is that Xero is way ahead of other vendors in terms of the depth and richness of its APIs, claimed Ridd.

Yet he did concede that the Xero APIs are not completely open. While some are available to all comers, for security reasons some of them are restricted to add-ons that are produced by the company's partners and certified by Xero.

Either way, cloud systems with open APIs can be an enormous benefit to small businesses, Ridd suggested.

Once, a small retailer with a handful of stores would have spent tens of thousands of dollars - perhaps $100,000 - on an integrated accounting/POS/staff scheduling/e-commerce system, even before paying a substantial amount for consulting services.

With cloud systems, the integration is done at the vendor level "taking so much workload and cost off the business owner" that small businesses can have the same capability that was previously only within reach of large organisations.

This approach is very flexible and very cost effective, said Ridd.

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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.